A leaner supply chain should be the goal of every business that relies on suppliers and shipping to customers. B2B and B2C brands alike need to ensure that every link in their supply chain is tested, checked, and constantly evaluated to ensure a lack of waste. That means energy, finance, and space waste all need to be addressed. The leaner a supply chain, the more efficient an organization, and that means a more profitable business model. The goal should be to systematically design your supply chain and then ensure that it is managed as effectively as possible. Here are the essential steps that you need to take if you want your supply chain to be a major contributor to brand success.
Eliminating Waste
All supply chains, no matter how complex, need to ensure a constant, uninterrupted flow of products, often in multiple directions. There are some key areas of waste that threaten the efficiency of a supply chain, and each one needs to be addressed if the goal is to create a leaner and more profitable supply process. System complexity can be one of the most overlooked causes of waste, with unnecessary steps alongside processes that are confusing. Both cause workflow disruptions. Systems need to be more streamlined, but you should also pay attention to:
- Lead Time: Excessive wait times will halt workflow and ensure that clients are left waiting or that manufacturing teams lack the materials and products that they need.
- Transport: Shipping containers and trucks that have empty space in them are wasting money and time in the same way that the unnecessary transportation of products is. Look at only using shipping firms that maximize space potential. Those that use load boards are the best solution for supply chain efficiency.
- Excessive Inventory: Goods or raw materials left in storage are eating up your budget. Ensure that inactive goods are kept to a minimum.
- Packaging: Excessive or inappropriate packaging will lead to damaged products, reducing supply chain efficiency and driving up costs.
- The Human Factor: This is any human output that isn’t providing value. Ensure that every person that is a link in your supply chain is working as efficiently as possible and has access to all of the resources that they need.
In recent years, energy waste has also become a waste factor. Eliminating energy waste in your supply chain isn’t just good financial sense. It’s also great news for your marketing and sales teams. Clients are looking for sustainable brands, and reducing energy waste is now a selling point.
Using Technology for a Leaner Supply Chain
More companies are using advanced technology to manage and monitor their supply chains than ever, and for good reasons. Advances like cloud tech, machine learning, and automated accounting have all made it significantly easier to monitor supply chain movement and make adjustments in real-time. Omni-channel fulfillment no longer has to be the complex and costly process that it used to be, with RFID technology alone is making it a simple matter to track every shipment in real-time. This level of transparency is vital for a leaner supply chain and just one of the ways that technology can be used to boost efficiency. Supply Chain Management software, Customer Relationship Management platforms, and Yard Management Solutions can all be integrated using cloud tech, meaning that even the most complex supply chain management system is significantly easier. Brands that are still using the same supply chain monitoring that they were using a decade ago have fallen behind and need to update as quickly as possible.
Total Cost Management
The end goal of any supply chain overhaul is to reduce costs while improving product delivery reliability. The best way to achieve this dual-target is to look at every link in the supply chain and make decisions that will allow you to meet expectations at the lowest cost possible. If one link in the chain is benefitting from your supply system at the expense of another link, then it’s time to start looking at alternative options. When those links can work together in a mutually beneficial way, then costs will come down, and workflow will become smoother. Every partner in the supply chain needs to share the financial and operational benefits of being more integrated.
Transparent Customer Usage
It’s common sense that the entire purpose of the supply chain is to ensure that the end customer gets what they need when they need it. Supply chain flow is always going to be dependent on customer usage. For that reason alone, end-customer usage must be visible to every link in your supply chain. That’s because when every person and system in your supply chain is focused on that customer usage, the setting of the supply chain pace can be set to maximum. Every link that slows down the pace or threatens to negatively impact the usage at the far end of the chain should be reevaluated.
Optimizing Velocity
If you want to increase the velocity of your supply chain, then smaller and more frequent shipments are often the first option that managers consider. The problem is that companies that try this method often lose more than they gain because they do not adjust their shipping options. Shipping containers leave factories half-full in the name of speed, dramatically affecting profit potential and causing excessive waste. While moving location isn’t always an option, other elements can be introduced into your supply chain that will dramatically improve supply chain velocity. Automation is becoming much more common to see in supply chains and factories alike, with predictive analysis and the growth of the IoT all contributing to increased speeds in supply chain management.
Every company that sits within a supply chain or at either end of one needs to ensure that transparency and waste monitoring are at the forefront of every decision that’s made. As modern consumers expect more than ever from the brands that they buy from, every link in the supply chain needs to be as lean, transparent, and as sustainable as possible. The good news is that for every improvement that you make in your supply chain, the potential to increase product sales only grows.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin